Apr 15, 2022
Find out what the leading investor, Warren Buffett, thinks about HP. Is the company a good buy?
A good analogy of the right entry at the right time can be seen in Warren Buffett’s purchase of HP. His company, Berkshire Hathaway, revealed it purchased 121 million shares (11% stake) of the PC maker, and HP’s 15% boost saw Buffett make $650 million on his $4.2 billion investment.
Warren Buffett, who was saved from the 1999 market crash because of his non-involvement in tech stock, turned a new leaf by purchasing a 5% stake in Apple in 2018. That $30 billion investment is now worth $160 billion, and Buffett’s company has racked in an average of $700 million in dividends every year.
The purchase of HP is Berkshire’s second-largest tech position (after Apple, of course), and it’s more of a value investment (best guess: it is for its semiconductor production) than a growth one.
Several analysts predicted it was a bad buy since personal computer sales are set to reduce after a crazy covid business season. Still, Warren Buffett, who until this year had not made any major investment since 2016, is $650 million richer on this one move.
The bears say Hi!! The stock market ended the week lower, and at first, we couldn’t point out what caused it. The fall was sudden, and although it was expected, it still took us by surprise (no one likes to see their portfolio dip). The market priced several news for the dip, and we’ll be going over a few of them now.
1. Mortgage rates are going up, putting the housing market on fire. What we mean is this; when mortgage rates are low, investors are incentivized to borrow more for home purchases. A high mortgage rate will mean the cost of borrowing is higher, and at a time when the US economy is on a fragile line, the result could be devastating. There is still a silver lining. The risk of default is 1% now competed to 16% in 2008
2. The energy sector is in a world of its own. The war between Russia and Ukraine is still on, but the effects resonate beyond the borders of these two countries. After several analysts predicted the war would be over within two weeks, it has lingered for much more. Energy prices have skyrocketed everywhere in the world, and there is little hope of them coming down soon. Perhaps the only respite will come from the war ending this week
3. Most quarterly earnings reports will be released this week, so investors are staying on cash and waiting for an opportunity to buy. This has kept volumes low, and with the other factors coming in, there is no staying power for the bulls.
What can’t Elon do? He is the chief marketing outlet for Tesla, the SpaceX project has gone further than NASA could single-handedly go as regards taking people to the moon, he can cause crypto to spike, and now, he has bought a 9.2% stake in Social media platform, Twitter, to include an edit button. Well, things are not exactly as they seem, and Elon is not on Twitter just for the edit button. The world as we know it is changing, and after Elon’s purchase, he would be taken into the board of directors, being one of the largest shareholders.
Later development revealed Elon declined the offer for reasons best known to him, but before he did, he gave some ideas on what Twitter could do to increase revenue. Although Elon would be Elon, some of the ideas he gave on development were just “Elon-ic,” like turning the Twitter san Francisco office into a homeless shelter, removing the ‘W’ in Twitter, and changing the Twitter logo to promote Dogecoin, popular meme crypto. The perhaps industrial side of Elon came out when he suggested Twitter could make some extra funds from a $3 per month authentication checkmark, and they get a 20-seconds edit feature on their tweets. This suggestion which has since been deleted offers some insights into helping Twitter innovate and earn more.
Although he will not join the Twitter board of Directors, Elon will play a big role in their success. He already pocketed a profit of $750 million, and his cult of persona suggests he declined the board of directors’ offer so he would not be limited by the Stake barrier placed at 14%. Twitter is down 5% on pre-market as at the time of writing, and who knows, the Doge master might buy some more shares on his initial $3billion investment.
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